TheRenewable Heat Incentive

explained

1

Paul BourgeoisDirector

Zero Carbon Britain Ltd.

Agenda

• Introduction• Context and History• Technology RHI rates and accessing them• Progress to date• What are the options?• Designing heat technologies• Case Studies

2

Context and History• Legislation• Government Strategy• Renewable Heat Incentive history

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Energy Act 2008

• Royal Assent on 28th November 2008– Implemented the legislative aspects of the Energy

White Paper 2007– Secretary of State to establish a financial support

programme– Carbon Capture and Storage (CCS)– Feed in Tariffs– Smart metering...

4

UK Renewable Energy Strategy

• July 2009• 20% reduction on greenhouse gas emissions• 20% energy from renewable sources

– 12% from renewable heat

• All by 2020• 60% by 2050

5

• Renewables Obligation (RO)• Feed in Tariff (FiT)• Renewable Heat Incentive (RHI)• Increase bio-fuels to 5% by 2013/4• Green Deal

Main support initiatives

Why are heat incentives needed?

• A policy mechanism to accelerate growth• Long term generation contracts

– 20 years for most technologies

• Price certainty over a fixed time• Retail Price Index (RPI)• Payment levels are performance based

7

The RHI, as originally planned• Announced on 10th March 2011• World first• First phase until 31st March 2012

– Non-domestic – metered heat– Domestic – limited to £12m via voucher scheme

• Second phase from 1st April 2012– Non-domestic – additional technologies– Domestic – similar to Feed in Tariff

8

What actually happened

• Non-domestic scheme– Phase 1

• Launched 28th November 2011

– Phase 2• Consultation to extend to new technologies• Air quality and biomass sustainability issues• July 2012

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Applicable technologies

• Heat generation and Bio-methane production• Biomass boilers (including CHP biomass)• Solar thermal• Ground source heat pumps• Water source heat pumps• Deep geo-thermal• Energy from municipal waste• On-site biogas• Injection of bio-methane into grid

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Non-domestic RHI Tariff RatesTariff name Technology Eligible size Rate

Small Biomass Tier 1 Solid biomass/solid waste (CHP) < 200 kWth 8.3p

Small Biomass Tier 2 Solid biomass/solid waste (CHP) < 200 kWth 2.1p

Medium Biomass Tier 1 Solid biomass/solid waste (CHP) 200 - 1000 kWth 5.1p

Medium Biomass Tier 2 Solid biomass/solid waste (CHP) 200 - 1000 kWth 2.1p

Large Biomass Solid biomass/solid waste (CHP) > 1000 kWth 1.0p

Small Heat Pumps Ground & water source, deep geothermal

< 100 kWth 4.7p

Large Heat Pumps Ground & water source, deep geothermal

> 100kWth 3.4p

Solar collectors Solar thermal collectors < 200 kWth 8.9p

Bio-methane/Biogas Injection & Combustion, not landfill gas

All scales 7.1p

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Tier 1 and 2• Tier 1 rate purpose is to compensate heat

users for the installation and fuel costs.• Tier 2 tariff is slightly lower than the fuel cost

to incentivise not wasting heat.• Tier 1 applies annually up to the Tier Break

(installed capacity x 1,314 peak load hours, i.e. kWth x 1,314)

• Tier 2 applies above the Tier Break.

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What happened - Domestic

• Renewable Heat Premium Payments– Voucher scheme operated by the Energy Saving

Trust from 21st July 2011 to 31st March 2012– 26th March 2012

• Extended in light on lengthy consultation• Not coinciding with Green Deal – October 2012

– Summer 2013

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Renewable Heat Premium Payment - RHPP

• For domestic properties - £12m (Phase 1)• £3m through Social Housing projects• Solar thermal (any property) - £300• Air Source Heat Pumps - £850• Ground Source Heat Pumps - £1,250• Biomass - £950• Phase 2 – additional £10m

Cost Control Measures - Timeline

• RHI from general taxation• September 2012 – Extending to other

technologies and Deployment of household Renewable Heat Incentive

• End of financial year – Cost Control Regime policy to be implemented

• Summer 2013 – Domestic RHI to be introduced

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Access to payments• Microgeneration Certification Scheme (MCS)

– Up to 45kWth for heat generation

• MCS Products and Installation Companies– Standards and levels competency– Building Regulations Compliance

• Certification through one of 16 bodies• REAL Assurance Scheme• Over 45kWth direct to Ofgem

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A Mark of Quality

Certification

Body

Certification

Body

RHPP Phase 1 Statistics

• August 2011 to March 2012

• £2.95m (less than 25% take up)18

Technology Vouchers issued Vouchers paid Conversion rate

Solar thermal 2479 1277 51.5%

Ground source 1389 710 51.1%

Air source 2571 1348 52.4%

Biomass 996 569 57.1%

RHI Non-domestic Statistics

• 28th November 2011 to 31st March 2012• 20 installations accredited• 5.25MW total capacity

– 80% Biomass– 15% Ground source heat pump– 5% Water source heat pump

• 376 applications (5.3% successful)– Incomplete, insufficient detail, inconsistencies

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The big question...

Uncertainty or opportunity?

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Opportunities

• On site generation• High heat demand

– Short payback periods– Minimal transmission losses

• Cross fertilising initiatives– Stimulated by Green Deal

• New build agenda– CfSH, Passivhaus, home economics

21

Burning questions? or

Q&A at the end

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• Consultancy and Advisory Service• Carbon reduction project management• Supply chain development• Passivhaus and Code for Sustainable Homes• Certificated and bespoke training courses• Sustainable Construction options appraisal

paulb@zerocarbonbritain.co.uk

Zero Carbon Britain